10-QPeriod: Q2 FY2015

MONOLITHIC POWER SYSTEMS INC Quarterly Report for Q2 Ended Jun 30, 2015

Filed August 3, 2015For Securities:MPWR

Summary

Monolithic Power Systems, Inc. (MPWR) reported solid revenue growth for the second quarter and the first half of 2015, demonstrating continued expansion in its core DC to DC and lighting control product segments. Revenue increased by 19% and 20.6% year-over-year for the three and six months ended June 30, 2015, respectively, driven by increased unit shipments. The company maintained a strong gross margin of 54.2% in Q2 2015, indicating effective cost management despite increased unit volumes. Financially, MPWR reported net income of $7.9 million for Q2 2015, up from $6.4 million in the prior year's quarter. The company also continues to return capital to shareholders through its stock repurchase program and dividend payments, with $20.1 million remaining under its authorized repurchase program as of June 30, 2015. While the company experienced a decrease in cash and cash equivalents and a net increase in inventories, its overall working capital position remains strong, providing ample liquidity for its operations.

Financial Highlights

49 data points
Beta

Revenue

$81.42M

54.2% Gross Margin

Net Income

$7.90M

9.7% Net Margin

EPS (Diluted)

$0.19

Total Assets

$417.62M

Cash & Equivalents

$80.87M

Free Cash Flow

$5.72M

Financial Statements
Beta
Revenue$81.42M
Cost of Revenue$37.29M
Gross Profit$44.13M
SG&A Expenses$17.96M
Operating Expenses$34.02M
Operating Income$10.11M
Net Income$7.90M
EPS (Basic)$0.20
EPS (Diluted)$0.19
Shares Outstanding (Basic)39.57M
Shares Outstanding (Diluted)40.74M

Key Highlights

  • 1Revenue increased by 19.0% to $81.4 million for the three months ended June 30, 2015, compared to $68.4 million for the same period in 2014.
  • 2Gross margin remained strong at 54.2% for the three months ended June 30, 2015, consistent with the prior year's period.
  • 3Net income for the three months ended June 30, 2015, was $7.9 million, or $0.19 per diluted share, an increase from $6.4 million, or $0.16 per diluted share, in the prior year.
  • 4For the six months ended June 30, 2015, revenue grew 20.6% to $155.0 million, with net income of $13.9 million.
  • 5The company maintained its stock repurchase program, with $20.1 million remaining available for repurchases as of June 30, 2015.
  • 6Operating expenses, particularly R&D and SG&A, increased in absolute terms but as a percentage of revenue, R&D decreased from 19.6% to 19.3% and SG&A decreased from 24.6% to 22.1% for the three-month period.
  • 7A one-time net charge of $2.7 million was recorded in the income tax provision related to the resolution of income tax audits in Q2 2015.

Frequently Asked Questions

For the three months ended June 30, 2015, revenue was $81.4 million, a 19.0% increase from $68.4 million in the same period of 2014. For the six months ended June 30, 2015, revenue was $155.0 million, a 20.6% increase from $128.5 million in the same period of 2014. This growth was driven by higher unit shipments in both DC to DC and lighting control products.

Net income for the second quarter of 2015 was $7.9 million, or $0.19 per diluted share, compared to $6.4 million, or $0.16 per diluted share, in the second quarter of 2014. The company maintained a strong gross margin of 54.2% for the quarter. A significant factor impacting the effective tax rate was a one-time net charge of $2.7 million related to the resolution of income tax audits.

As of June 30, 2015, Monolithic Power Systems had $80.9 million in cash and cash equivalents and $150.2 million in short-term investments, totaling $231.0 million. The company reported working capital of $279.1 million. The company believes its operating cash flow, combined with existing cash and investments, will be sufficient to meet its liquidity requirements for the next 12 months.

Research and Development (R&D) expenses increased by $2.3 million to $15.7 million for Q2 2015, primarily due to higher cash compensation and stock-based compensation expenses. Selling, General, and Administrative (SG&A) expenses increased by $1.1 million to $18.0 million for Q2 2015, mainly due to increases in cash compensation and stock-based compensation. Despite these increases in absolute terms, both R&D and SG&A expenses as a percentage of revenue decreased compared to the prior year's quarter.